A new study from the New America Foundation suggests that the United States is lagging in the broadband speed race. The study compared high-speed Internet service in major cities around the world, and found that high-speed broadband service was dramatically more expensive and slower in the United States than in leading countries outside the United States. The authors blame these disappointing results on bad public policy.

International telecommunications comparisons are difficult, because broadband service is a complex, non-homogenous product. Broadband services can offer different speeds, data caps, prices, and reliability guarantees. Typical speeds may be much lower than average speeds, and some companies offer customers substantial discounts over their standard prices. And things get even more complicated when Internet access is bundled with telephone and television services.

High prices, low speeds

The New America Foundation used three different methods to try to cut through the clutter and come up with fair comparisons. First, they looked at the cost of basic "triple play" bundles—phone, video, and Internet—in various countries around the world. They attempted to make the packages comparable by choosing the cheapest service in each category: only basic television service and the slowest available Internet speeds. They then ranked 57 different cities based on the price of this basic triple-play package.

The results didn't look good for the United States. The most expensive city surveyed was New York, where Verizon charges $154.98 for the cheapest fiber triple-play package. All the American cities considered were in the bottom half of the ranking. AT&T offered the cheapest triple play package: $65.60 in Lafayette, LA.

In contrast, Riga, Seoul, and Paris all offered triple-play packages for less than $40 per month. London, Amsterdam, Berlin, Copenhagen, and Hong Kong all had triple play packages available for under $50.

Next, New America focused on stand-alone broadband service, looking for the fastest connection available for around $35 per month. The best-performing American city was San Francisco, where Webpass offers a 200Mbps service for $37.50 per month. New Yorkers and Washingtonians can get 25Mbps service for less than $40 per month, while Los Angelinos only get 10Mbps of downstream bandwidth for $29.99.

With the exception of San Francisco, these speeds are way behind the world leaders. A Hong Kong service provider offers 500Mbps service for $37.34 per month. Providers in Tokyo, Riga, Seoul, Paris, Bucharest, and Berlin all offer services with 100Mbps download speeds service for less than $40 per month.

Finally, the study looked at the fastest Internet connections in the world. Here, the United States had a surprise champion. Residents of Chattanooga, TN, can get gigabit Internet access. Unfortunately, that service costs $317.03 per month. Verizon offers 150Mbps service in New York for $159.95 per month, and Comcast offers 105Mbps service in Washington, DC, for $105.00.

Several other cities offer comparable speeds for much less money. In Hong Kong, you can get a gigabit connection for $48.59 per month. Amsterdam offers a half gigabit for $83.33 per month. Tokyo residents can get a symmetrical 200Mbps connection for $26.85 per month.

Verizon responds

Unsurprisingly, Verizon argues that New America isn't making apples-to-apples comparisons. "While we understand a desire to attempt to benchmark US broadband and communications services packages, such studies simply do not accurately reflect the products and services that are offered, consumer demands or expectations, or the competitive realities of the countries or regions in question," a Verizon spokesman told Ars by email.

Verizon pointed to an ITU study that suggests that US providers are doing a good job of providing affordable "entry-level" broadband to consumers.

A company spokesman also argued that it's difficult to do an apples-to-apples comparison because the "basic" television bundle differed from country to country. He noted that Verizon offers "distinguishing value-adds" like video on demand that may not be available in the basic cable television package in other countries.

Finally, he noted that the ultra-fast speeds touted in the New America study are only available in geographically limited areas. He pointed to Hong Kong as an example. "The company itself says that it does not guarantee that speed outside of the city and in fact it is more like 20 megs outside of Hong Kong," the spokesman told us.

"Really flawed assumption"

The New America Foundation's Benjamin Lennett didn't dispute that point. "We only looked at cities," he told us in a phone interview. The problem, he said, was that incumbents in the United States don't offer ultra-fast speeds even in urban areas whose high density ought to make them cost-effective.

What can be done to improve America's broadband performance? Lennett told Ars that the first step is to recognize that there is a problem. He argued that broadband policy in recent years has been based on the "really flawed assumption that telephone companies and cable companies are going to compete with each other." Instead, he said, we've gotten a "negotiated truce" in which cable incumbents enjoy a de facto monopoly on high-speed broadband service, while Verizon and AT&T focus primarily on their wireless platforms. "The consumer is going to lose from that," Lennett said.

Lennett suggested two policies that might rejuvenate the US broadband market. First, he suggested that policymakers should re-evaluate the 2005 decision to abandon line-sharing rules. In many other countries, incumbent firms are required to lease their facilities to competitors at regulated rates.

Second, Lennett argued that more cities should consider municipal fiber projects. The study included three small cities—Chatanooga, TN; Lafayette, LA; and Bristol, VA—that have built city-owned fiber networks. Although those networks are not offering dramatically lower prices than the incumbents, they are providing some of the nation's fastest broadband speeds. And Lennett suggested that they would be able to cut their prices once they've paid off the costs of initial construction.

Verizon has a point that international broadband comparisons can be tricky. The overwhelming majority of the world's residents don't live in the few dozen cities New America chose for its study, so it's important to interpret the results with caution. But even if we assume Verizon is right that the United States isn't doing as poorly as the New America suggests, the study is nevertheless another piece of evidence that the United States no longer leads the world in broadband deployment.

Sort of expected... Not surprising in the least, Stand back America you are in danger of becoming a third world nation when it comes to communications and infrastructure while still paying First World + prices for it.

Seeing as how Canada and Australia both have similar issues in terms of speed and pricing I would argue that comparing the US to tiny countries with huge populations would make a difference in results.

Tax payers not paying enough in taxes so they can give the money back to themselves in the form of broadband subsidies.

There's more to public policy than tax breaks, as has been commented on many times in various articles, including those on Arstechnica.You don't need tax breaks to get competition in broadband, you need laws that encourage and/or promote competition.

For instance, in the UK, because the entire telephone network was originally government owned and funded, they require the now public network owner to allow others access to the network to run their own ISPs and provide services.Now the US is not necessarily totally comparable, but it's an example of where public policy leads to competition without requiring tax breaks (now).Originally taxes paid for the network. Now that taxpayer paid network has been opened up to competition without requiring any additional tax related payments.

A further example in the US would be where local telcos challenge the development in court of municipal networks because they don't want to lose their monopolies. Allowing development of municipal networks on a commercial basis would result in increased competition.

Seeing as how Canada and Australia both have similar issues in terms of speed and pricing I would argue that comparing the US to tiny countries with huge populations would make a difference in results.

Size matters.

Yep, clearly NY is just too small for companies to invest into fiber and offer it at sensible prices. And considering that the study includes some small cities that show the opposite of NY and other much larger cities, it just shows how much influence policy makers can have in infrastructure measures (that's not the same as just "offer tax breaks" btw if that shouldn't be clear)

The free market is interested in maximizing its profits, if that means reusing ten year old infrastructure to save costs, why not?

Seeing as how Canada and Australia both have similar issues in terms of speed and pricing I would argue that comparing the US to tiny countries with huge populations would make a difference in results.

Size matters.

Yes and no. I buy that argument as to why *I* have weak/expensive internet service (I live in a tiny suburb on the outskirts of a medium-sized city and the best I can do is 50 Mbps @ $90/month).

NYC, LA and Washington D.C. have as many people as Seoul, Paris or Hong Kong. Why don't they have similar internet pricing?

edit: I'm a free-market proponent. But broadband can't be a free market, at least not until someone comes up with a way to deliver internet that doesn't involve municipal franchise agreements, permits to run cables or bandwidth-restricted airwaves. But I don't think quantum entanglement based networking is going to be arriving anytime soon.

Usually, the reason cited is that the US is so big and sparsely populated, however this study only looked at major cities....

I pay about $55/mo for 100Mb. I live in a Swedish city of 150,000 inhabitants surrounded by farmland. My parents who live in a village of 100 people, 20 miles from the nearest city, still have access to 10Mb/s.

The ADSL, then the GSM, market woke up in France only after the government went after the incumbents, by enforcing strict infrastructure-sharing rules (either straight renting out of capacity, or premises/equipment sharing...) that let newcomers get a presence quickly, and then, and only then, build their own capacity; with strict deadlines( ie cover 27% of the population with your own network after 1yr, 60% afetr 2, 90% after 3...). Of course that also implied strict, and single, standard compliance. Every mobile operators relies on the exact same standards. Not only can phones move from one network to the other, but backend equipment, too.

So everwhere else in the developed world has better broadband than America?In other news; grass is green, the sky is blue and bears shit in the woods.

Next you're going to tell me that American politicians are all bought and paid for!

studentx wrote:

Is this the free market Republican's are always talking about.

Sounds like time for some regulation and government fiber projects, like what was done with the interstate system.

Actually no, no it's not a free market at all, government controls everything from the frequencies you're allowed to broadcast on, to whether or not you get a permit to dig up land to lay cable. All the while paying them a sizeable chunk of your profits. If you want proof that free markets don't work, you first have to find a free market...

Don't get me wrong, I find most people who identify as republican are usually statist idiots, but fair is fair, you don't get to call them out on their ideas not working, if the current implementation is not what they advocate for, that's called the strawman fallacy.

"They attempted to make the packages comparable by choosing the cheapest service in each category: only basic television service and the slowest available Internet speeds."

That's not even an option here. Charter apparently is not offering a basic television package anymore. The minimum is 100 HD channels for $65/month (and that's as part of a bundle). Not sure how they would compute it in this case.

I fully support municipal fiber, then open the system so consumers can pick any carrier they want. It's the only way to get competition back into the system. Remove the natural monopoly aspect and level the playing field.

Tax payers not paying enough in taxes so they can give the money back to themselves in the form of broadband subsidies.

There's more to public policy than tax breaks, as has been commented on many times in various articles, including those on Arstechnica.You don't need tax breaks to get competition in broadband, you need laws that encourage and/or promote competition.

For instance, in the UK, because the entire telephone network was originally government owned and funded, they require the now public network owner to allow others access to the network to run their own ISPs and provide services.Now the US is not necessarily totally comparable, but it's an example of where public policy leads to competition without requiring tax breaks (now).Originally taxes paid for the network. Now that taxpayer paid network has been opened up to competition without requiring any additional tax related payments.

A further example in the US would be where local telcos challenge the development in court of municipal networks because they don't want to lose their monopolies. Allowing development of municipal networks on a commercial basis would result in increased competition.

If a city by their own stupidity grants a legal monopoly to an ISP to provide service when it wouldn't be profitable otherwise why shouldn't they have the right to sue if the municipality decides to turn around and build a tax payer funded network?

Problem will get solved when government nationalizes the lines. Sooner or later the public will get fed up with the legalized price fixing, collusion, and outright theft that the corporate telecoms are currently engaged in.

Seeing as how Canada and Australia both have similar issues in terms of speed and pricing I would argue that comparing the US to tiny countries with huge populations would make a difference in results.

Size matters.

Yes and no. I buy that argument as to why *I* have weak/expensive internet service (I live in a tiny suburb on the outskirts of a medium-sized city and the best I can do is 50 Mbps @ $90/month).

NYC, LA and Washington D.C. have as many people as Seoul, Paris or Hong Kong. Why don't they have similar internet pricing?

NYC, LA, and Washington D.C. do have a similar price scheme.

Metro area internet is cheaper than rural internet within the US. Many rural citizens complain about paying $40/m for 1.5mbps when they live in the middle of nowhere. While other people living in a more metro area in the US will pay the same amount for 15mbps.

Metro areas within the US get cheaper pricing than rural areas within the US. Which most likely applies to countries like South Korea and their providers.

People seem to have this misconception that internet prices within the US are all the same regardless of markets which is not the case. Bigger markets do have cheaper prices.

Just because it's cheaper to provide a service in a super metro in one country doesn't mean it's just as cheap to provide it here. Especially due to aesthetics regulations and the push for ISP's to cross subsidize due to pressure to serve unprofitable areas.

I feel like we're getting an overly simplistic picture of costs here. We need to see hard numbers of ISP costs not just guesswork.

My solution to better competition would be to bar municipalities from giving exclusivity contracts to ISP's. This would also knock out the problem of them being sued by said ISP when they want to build their own network.

Another solution would be to stop making it such a pain in the ass to run lines. Aesthetic regulations for towers and lines make it such a hassle for many newcomers to run networks and incumbents to expand new ones.

America actually has decent broadband infrastructure and speeds. The problem is the price - while FiOS is nice and quick and offers a 300Mbps tier that's faster than anything in the UK, it is massively expensive. The cheapest 15Mbps plan is $70, while Virgin Media's most expensive 120Mbps plan is £35.

Just because it's cheaper to provide a service in a super metro in one country doesn't mean it's just as cheap to provide it here. Especially due to aesthetics regulations and the push for ISP's to cross subsidize due to pressure to serve unprofitable areas.

Do you think ISPs are allowed to put cables wherever they want in Europe and Asia? If anything, regulation is most likely stricter.

And I've a hard time imagining that local ISPs are forced in the US to subsidize other ISPs in completely different regions to large degrees, but yes since there are much more rural areas in the US that could factor in - if you have any proof that this is actually happening.

And no, I don't think anyone has the misconception that internet prices are all the same - they only have the conception that prices in the US are 3-4times higher than they should be (extremely conservative) and you can't even get comparable data rates even in highly populated areas. Both things which are empirically true.

theJonTech wrote:

It takes more fiber to run in Texas then any five European Countries plus Japan Apples to Oranges

Good thing then that they compared Paris to NYC and not texas to anything else.

Yes and no. I buy that argument as to why *I* have weak/expensive internet service (I live in a tiny suburb on the outskirts of a medium-sized city and the best I can do is 50 Mbps @ $90/month).

You don't know how fucking good you have it. The ABSOLUTE fastest internet that is offered in my brand new construction house by the Bell Canada overlords is 6Mbs. The fact that you can even GET 50Mbps is painful for me to hear, no sympathy at all!

The only provider in my area is a telephone co-op that has the county locked down. The county doesn't allow any other providers in. We have comcast digital cable, but comcast is not allowed to provide us internet. The telco charges $55/mo for 1.5mbps but you HAVE to purchase a landline as well (which is $30/mo without long distance) or pay over $120/mo to get the line without a landline!

America pays the cheapest prices for many things, including gas, food, consumer goods, and electronics compared to many first-world nations. Coming to the US from Canada is a shopping mecca especially since I have an address here and can regularly buy things for cheap from Amazon, get streaming services for cheap from Amazon and Hulu, and so forth.

And cheap gas. I live on the west coast where gas is the most expensive in the country and it's STILL cheap compared to Canada.

I think while it's nice to always want cheaper cheaper cheaper more more more there has to be some kind of give here.

I love all the people who tout their "free market" ideologies while not understanding what it means to be a free market. In a free market, the distribution model with the best economic advantage wins. And the best distribution is not always competition, but unfortunately everybody assumes that it is.

Broadband is pretty much a classic case of natural monopoly (http://en.wikipedia.org/wiki/Natural_monopoly): only the biggest companies can profitably lay down the architecture for broadband access. If there's too much competition, no company feels an incentive to expand the wires to places where it is needed, and it might be too costly to do so. Not only that but since the architecture is essentially proprietary, the first to introduce broadband access to a region pretty much wins that region unless a incredibly large/powerful other company steps in.

This is why so many places only have 1 or 2 competitors in a region; it's not desirable or possible for there to be more. This is what the free market has produced. Satisfied?

Verizon pointed to an ITU study that suggests that US providers are doing a good job of providing affordable "entry-level" broadband to consumers.

Wow Verizon, way to win the fight of the lightweights! The USA is going to conquer the world with progress like that! [/snark]

Regarding competition - a vibrant, competitive market requires heavy gov't oversight. Why? Because unregulated markets end up with 1 or 2 winners and a bunch of losers. The winners then do what they want and charge what they want. Companies hate highly competitive markets because their margins are cut to razor thin. If they can buy up or destroy their competitors and become the dominant player, profits galore!

Just because it's cheaper to provide a service in a super metro in one country doesn't mean it's just as cheap to provide it here. Especially due to aesthetics regulations and the push for ISP's to cross subsidize due to pressure to serve unprofitable areas.

Do you think ISPs are allowed to put cables wherever they want in Europe and Asia? If anything, regulation is most likely stricter.

And I've a hard time imagining that local ISPs are forced in the US to subsidize other ISPs in completely different regions to large degrees, but yes since there are much more rural areas in the US that could factor in - if you have any proof that this is actually happening.

And no, I don't think anyone has the misconception that internet prices are all the same - they only have the conception that prices in the US are 3-4times higher than they should be (extremely conservative) and you can't even get comparable data rates even in highly populated areas. Both things which are empirically true.

theJonTech wrote:

It takes more fiber to run in Texas then any five European Countries plus Japan Apples to Oranges

Good thing then that they compared Paris to NYC and not texas to anything else.

Yeah but some of our main hubs run through Dallas. Can't compare one small country as its infrastructure is self contained, whereas our is spread all over the place.

"United States no longer leads the world" aside from prison population and teen pregnancy what do we lead the world in anymore? health care costs, umm ah military spending we got that one kiddies. see we ain't doing so bad.

"United States no longer leads the world" aside from prison population and teen pregnancy what do we lead the world in anymore? health care costs, umm ah military spending we got that one kiddies. see we ain't doing so bad.